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Dollar Rises as Fed Steady; Yen Drops

(Bloomberg) -- A Bloomberg gauge of the dollar ended a four-day losing streak after the Federal Reserve kept interest-rates steady. The yen fell against the greenback after Treasury Secretary Scott Bessent said the US is “absolutely not” intervening in the market for Japan’s currency.

Dollar Rises as Fed Steady; Yen Drops

WHAT TO WATCH:

  • Japan consumer confidence
  • Philippines GDP

WEDNESDAY TRADING SESSIONS (as of ~4pm New York time):

  • The Bloomberg Dollar Spot Index up 0.4%
    • Marc Chandler, chief market strategist of Bannockburn Global, said that Bessent’s comments were “damage control” after Friday’s news reports about the NY Fed conducting a rate check on behalf of the US Treasury. “I think the sharpness of the move caught them by surprise”
  • Asia Pacific G-10 FX
  • USD/JPY up 0.8% to 153.39
    • “The yen movement over the past few days has been a major drag on the dollar, so this confirmation of non-intervention is solidly dollar positive,” said Andrew Hazlett, a foreign-exchange trader at Monex Inc

AUD/USD rose 0.3% to 0.7029

NZD/USD rose 0.1% to 0.6051

  • Treasury 10-year yields rose 0.2bps to 4.25%; while the 5s30s curve flattened 1.0bps to 101.9bps TOP NEWS:
  • Treasuries held onto a modest loss after the Federal Reserve kept interest rates steady as expected and cited signs of stabilization in the US jobless rate.
  • Strong European growth and early signs that Germany’s fiscal stimulus is feeding through to the economy prompted Manulife Investment Management to raise its year-end euro forecast to $1.25 from $1.20, senior global macro analyst Erica Camilleri said in an interview.
  • Brazil will tap international debt markets more often in 2026 with bond issuances denominated in a trio of currencies, the Brazilian Treasury announced in a plan released on Wednesday.
  • One of Canada’s biggest institutional investors is citing the Swiss franc, Japanese yen and gold as potential alternatives to the US dollar as President Donald Trump’s policies pressure the greenback.
  • Oil rose to a fresh four-month high after Trump threatened another attack on Iran, urging Tehran to negotiate a nuclear deal.

KEY VIEWS:

DATA RELEASED WEDNESDAY:

  • 20:00: (US) Jan. MBA Mortgage Applications, actual -8.5%, prior 14.1%
  • 22:45: (Canada) Jan. Bank of Canada Rate Decision, actual 2.25%, est. 2.25%, prior 2.25%
  • 03:00: (US) Jan. FOMC Rate Decision (Upper Boun, actual 3.75%, est. 3.75%, prior 3.75%
  • Jan. FOMC Rate Decision (Lower Boun, actual 3.50%, est. 3.50%, prior 3.50%
  • Jan. Fed Interest on Reserve Balanc, actual 3.65%, est. 3.65%, prior 3.65%
  • Jan. Fed Reverse Repo Rate, actual 3.50%, prior 3.50% ECONOMIC DATA (All times HK):
  • 05:45: (New Zealand) Dec. Trade Balance NZD, prior -163m
  • Dec. Exports NZD, prior 6.99b
  • Dec. Imports NZD, prior 7.15b
  • Dec. Trade Balance 12 Mth YTD NZD, prior -2.06b
  • 07:50: (Japan) Jan. Foreign Buying Japan Bonds, prior JPY1.47t
  • Jan. Japan Buying Foreign Stocks, prior JPY272.5b
  • Jan. Net Stocks Investment, prior JPY874b
  • Jan. Japan Buying Foreign Bonds, prior -JPY361.4b
  • 08:00: (New Zealand) Jan. ANZ Business Confidence, prior 73.6
  • Jan. ANZ Activity Outlook, prior 60.9
  • 08:00: (Singapore) MAS Jan. 2026 Monetary Policy Statement
  • 08:30: (Australia) 4Q Import Price Index QoQ, prior -0.4%
  • 4Q Export Price Index QoQ, prior -0.9%
  • 10:00: (Philippines) 4Q GDP YoY, est. 3.7%, prior 4.0%
  • 4Q GDP SA QoQ, est. 0.9%, prior 0.4%
  • 2025 GDP Annual YoY, est. 4.6%, prior 5.6%
  • 12:00: (Thailand) Dec. Capacity Utilization ISIC, prior 55.49
  • Dec. Mfg Production Index ISIC NSA, est. -0.40%, prior -4.24%
  • 13:00: (Japan) Jan. Consumer Confidence Index, est. 37.1, prior 37.2
  • (Singapore) Dec. Unemployment rate SA, est. 2.0%, prior 2.0% CENTRAL BANKS (All times HK):
  • Nothing major scheduled

BOND SALES/PURCHASES (All times HK):

  • For corporate bonds, see New Issue Monitor
  • 09:35: New Zealand to Sell NZ$25 Million 3.25% 2050 Linkers on Jan. 29
  • 09:35: New Zealand to Sell NZ$225 Million 1.5% 2031 Bonds on Jan. 29
  • 09:35: New Zealand to Sell NZ$175 Million 3.5% 2033 Bonds on Jan. 29
  • 09:35: New Zealand to Sell NZ$50 Million 2.75% 2051 Bonds on Jan. 29
  • 11:00: Bank of Thailand to Sell 15 Billion Thb of 2027 Bonds On Jan 29
  • 11:30: Malaysia to Sell 3 Billion Myr of New 2056 Bonds On Jan 29 MARKETS AS OF 4pm New York time:
  • USD/JPY +0.8% to 153.40 (range 152.18–154.05)
  • EUR/USD -0.8% to 1.1945 (range 1.1896–1.2045)
  • AUD/USD +0.2% to 0.7028 (range 0.6977–0.7032)
  • NZD/USD +0.1% to 0.6050 (range 0.6008–0.6053)
  • USD/CAD -0.1% to 1.3558 (range 1.3536–1.3615)
  • GBP/USD -0.4% to 1.3799 (range 1.3750–1.3849)
  • USD/CHF +1.0% to 0.7691 (range 0.7612–0.7728)
  • 1-mo. USD/TWD NDF +0.5% to 31.246 (range 31.044–31.343)
  • Bloomberg Dollar Spot Index +0.4% to 1,179.50 (range 1,174.87–1,183.42)
  • JPM FX Volatility Index +2.0% to 7.72 (range 7.57–7.72)
  • US Stocks

S&P 500 little changed at 6,978.06 (range 6,963.46–7,002.28)

DJIA little changed at 49,015.72 (range 48,901.49–49,150.34)

  • Commodities
    • WTI Crude +1.6% to $63.37/bbl (range $62.07–$63.52)
    • Gold +4.0% to $5,389/oz (range $5,158–$5,391)
      • Copper +2.1% to $5.98/lb (range $5.90–$6.00)

TECHNICAL OUTLOOK:

Reporting by Miles J. Herszenhorn